The funds were raised through a placement of 25 million shares priced at $0.12 each to xisting shareholders and new institutional and sophisticated investors.
"This capital raising allows Cleveland to continue to ramp up production at the Premier Gold Mine and increase the efficiency and profitability of the operation over time," managing director David Mendelawitz said,
"We are pleased with the significant support for the Placement from existing shareholders, new investors and broking firms. We believe these relationships will provide ongoing support for Cleveland as it executes its growth strategy of developing low cost mines in Brazil, starting with the Premier operation."
Funds raised include $100,000 from director Russell Scrimshaw.
As a result of the placement, Cleveland will not draw down any further from the Investment
Facility provided by Baycrest Capital, doing so without cost or penalty.
Proceeds will be used for the following capital works at Premier:
- Procurement and installation of a new primary crushing circuit to replace the contract crusher that has been demobilised from site;
- Commencement of pre-stripping of waste over the higher-grade "Metago" pit at Premier; and
- Upgrading the process water supply to match the newly-optimised ball mill.
In addition, about $400,000 will be used to repay a loan facility that was established and drawn in late 2012.
Premier Gold Mine
Cleveland Mining recently resumed production from its Premier Gold Mine after implementing a comprehensive cost-cutting plan that will significantly improve future operating margins.
Importantly, C1 cash costs of US$400 per ounce should be achievable once mining of higher grade material commences at Premier and O Capitão.
This is modelled on the basis of 90% gold recovery achieved after the installation of the final circuit and running at about 24,000 tonnes per month.
Cleveland is expected to be cash flow positive in the fourth quarter of 2013.
With the funding in place, Cleveland Mining is now well positioned with its plans to reduce costs and increase gold production at the Premier Mine.
Its estimated cash costs of US$400 per ounce will provide for healthy margins with gold prices breaking through the US$1,400 per ounce barrier in the spot markets.
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